FT reports 26% drop in net profits for 2009

25 Feb 2010

France Telecom (FT) today reported its financial results for FY2009, recording a 26% fall in net income following an EU Commission directive to repay EUR964 million (USD1.3 billion) in state aid which was deemed to have been illegal. The former state-owned monopoly, whose single largest shareholder is still the French government, posted net profit of around EUR3 billion, down from EUR4.1 billion in FY2008. The charge relates to an EU competition authority ruling over what Brussels ruled were illegal tax breaks the telco received before 2003. The French behemoth said its fourth-quarter results were further impacted by lower inter-operator fees as new regulations in some of its major European markets – e.g. France, the UK and Poland – reduced the fees operators pay each other to send calls over each others’ networks. FT said 4Q09 earnings before interest, tax, depreciation and amortisation (EBITDA), removing the impact on the EU Commission ruling, dipped 0.9% year-on-year to EUR3.7 billion, on a 3.3% fall in fourth-quarter turnover to EUR11.5 billion; FY2009 revenue was largely unchanged at EUR46 billion.

The telco’s incoming chief executive officer Stephane Richard also announced his new team of top managers, and is expected to take over officially on 1 March 2010. Richard has attempted to calm market jitters however, by confirming the group is sticking to its principal medium-term objective of generating free cash flow of EUR8 billion in 2010 and 2011, and paying out a significant dividend. In the past two years FT has been rocked by number of suicides by its employees. Unions blame the deaths – 37 employees have killed themselves since 2008 – on pressures related to the group’s wrenching restructuring. The suicides prompted the operator to put its corporate restructuring on hold in 4Q09. The former state-run company laid off some 22,000 people in 2006/08.

France, Orange Group